NEW DELHI: The Right of Way rules, introduced in November last year, are yet to bring benefit to the Indian telecom sector due to lack of clarity and implementation hurdles. Analysts believe that it will take another year for telcos to report any cost benefits or ease of rolling out infrastructure as result of the RoW policy.

“The Right of Way challenge has been a contentious issue for the Indian telecoms sector impediments and delays as a result of variable and complex procedures across states, non-uniformity in levies, and obtaining approvals from the Forest Department, Railways and National Highway Authority has greatly impacted planning and roll outs of towers and fibre across the country,” said Prashant Singhal, the global telecommunications leader at Ernst & Young.

The RoW rules are considered as a key enabler for expediting the deployment of underground (optical fibre) and over ground (mobile towers) infrastructure in India. The rules aim to rationalise administrative expenses across the country to a maximum of Rs 1000 per km for fibre, and a maximum of Rs 10 000 per application for overhead towers.

The rules mandate development of an electronic application process within one year of the roll-out of ROW rules, single clearance window for application, designation of nodal officers for appropriate authorities, and fast-tracking decision on RoW permits to within 60 days after application are expected to facilitate a transparent, economical and rapid rollout of fibre backhaul in the country.

Rohan Dhamija, partner and head for India and South Asia at Analysys Mason said that a lot of states are yet to implement them in practicality including appointing of Nodal officer to facilitate clearances from various authorities.

Singhal said that state governments and local bodies are not fully aware of the explicit benefits that they could derive due to simpler RoW policy.

Speaking on further challenges, Dhamija said that there are still grey areas in RoW where local bodies use this as a revenue generating mechanism instead of levying costs just for the purposes of restoration. “As a result, rolling out optical fibre could turn out to be significantly expensive in certain localities in the country,” he said, citing industry inputs.

In the absence of RoW guidelines, lack of space for setting up telecom infrastructure was often being cited as a reason by telecom companies for poor quality network. The rules allow telcos to install towers on government properties such as administrative offices and post offices.

However, analysts feel that the government could set up central or state level agencies to monitor the success of the policy, and report and resolve issues or disputes in implementing the policies. Another aligned thrust area of policy could have been towards encouraging real estate developers for deploying fibre access infrastructure in new buildings for enabling telcos to quickly deploy fibre.

Hemant Joshi, Partner and TMT leader, Deloitte said that the policy which currently covers only RoW related issues for accessing land for deploying network infrastructure, can also look at addressing land acquisition hurdles for deploying other critical network infrastructure like Data Centers, IXPs and telecom NOCs.

The Department of Telecommunications (DoT) was also considering setting up a task force to oversee implementation of RoW rules, including land related issues in states but this has not happened as of yet.

RoW and 4G network expansion

Indian telecom industry is currently seeing a rapid surge in data consumption following the commercial launch of Reliance Jio, which disrupted the market with free voice and 4G data services, and forced incumbent telcos to slash data rates and come up with attractive data rich offerings.

However, more 4G means more fibre, which is the best option for high-speed data communication. Fiber, however, is in short supply in India. In a higher quality 4G environment, microwave-based backhaul will become less relevant and there will be a need for more fibre.

“The “fiberisation” process has a long way to go as current levels are low. The problem goes far beyond capex issues,” Singhal said, adding effective implementation of the RoW policy is critical to facilitate network expansion.

Currently at the ground level, it is difficult to lay optical fibre networks because of right of way complaints. Singhal added that this is also one reason why the National Optical Fibre Network, a government project initiated in 2011 to provide broadband connectivity, is well behind schedule.It is worth noting that in India, less than 25% of telecom towers carry fibre optics against the average in the US, China and Korea where it is as high as 65-80%. Interestingly, total cumulative fibre deployed to population ratio today in the US is 1.4x, China 0.9x but only 0.1x in India, according to EY data.

Indian telecom operators are expected to deploy 4G base stations on more than 80% of their 2G sites. “In turn, fiberisation curve is expected to rise to c70% by FY20.

This implies that the number of towers fiberized will increase from 90,000 to about 333,000. Given the pace of growth, sorting RoW issues play a critical role,” Singhal added.

Joshi said that the Indian government could have introduced additional financial and operational incentives while standardizing for telcos to encourage them to roll out infrastructure in semi-urban and rural areas, where telcos are more cost sensitive due to lower revenue potential.

RoW and Tower Companies

Also, as one of the major drawbacks, the policy failed to include tower companies such as Bharti Infratel, Indus Towers and American Tower Corp from seeking benefits under the rules as the policy stated that only a ‘telecom service licensee’ could avail the benefits.

Therefore, in May 2017, the telecom regulator asked DoT to revisit RoW rules for the inclusion of tower companies (IP-1 license holders) under the ambit of the Right of Way Rules, since their exclusion could affect quality of services by disincentivising tower rollout in the country.

The industry also seems to be aligned on this, however, the timeline for inclusion is unclear. There will be a need to fiberize 70% of the total towers from current 25% in India in view of planned 4G deployment. To scale the growth, it is imperative that the government expedites to include tower companies in the policy, said EY’s Singhal.

“The exclusion of infrastructure players from the coverage of the new RoW policy is a major challenge, as in India most of the 450,000+ towers are owned by independent towercos, which do not enjoy the benefits of the new RoW policy. Hence, pace of deploying FTTT and new mobile towers may remain slow and lop-sided,” Delloite’s Joshi said.

Currently, the industry is lacking clarity on when entities with infrastructure provider (IP-1) licences will be included in the new RoW policy.

“Though, TAIPA, representing towercos in India and TRAI, have made submissions to the government for the same, DoT and government is of the view that mobile tower companies have successfully been able to deploy tower infrastructure so far, and should be able to continue to do so,” said Joshi.

Taipa had also sought abolition of property and other taxes which are not in sync with the central government rules and are being imposed in different states.Reliance Jio which was laying underground optical fibre in 2014 also faced several RoW-related issues which hit its network expansion progress at the time.

Therefore, the objective of RoW was to set standards for granting permission to telecom companies for setting up their towers or fibre network. As suggested by Deloitte, the government could have also introduced additional financial and operational incentives while standardizing for telcos to encourage them to roll out infrastructure in semi-urban and rural areas where telcos are more cost sensitive due to lower revenue potential.